Do You Know Your Credit Score

Understand Your Credit Report Your Credit Report:

It is a detailed report of your credit history. Credit bureaus collect information from various sources (banks, lenders, credit card companies and NBFCs) to create your credit report. Credit bureaus charge Rs.300-500 for providing credit report.

You Can Get It Free:

The RBI has mandated that all credit information companies should provide one credit report free to a customer in a year. This free facility will give a basic report. You can log on to the websites of the credit bureaus and avail of this benefit directly.

Your Credit Score:

Though the score ranges between 300 & 900, the average is 750. The higher the score, the lower is your risk profile & easier for you to get loan. Majority of those who get a loan and have a score of 750 & above. With a lower score, you may not get a loan from a big bank, but from a smaller bank or NBFC, at a higher interest rate.

How It Is Calculated?

Your credit score is based on your credit behaviour, payment history, the types of loans you have, your credit limit utilization and the kind & number of enquires raised by lenders against your PAN.

Are You Over Leveraged?

Lenders use the credit report to know how leveraged you are. If you have taken too many loans or have not been repaying in time. , your credit score and chances of further borrowing get nixed. Similarly, the credit score also tells lenders how the person is utilizing the credit.

Your credit score plays a key role when you apply for a loan. Yet, a survey of 1500 respondents shows that very few Indians know what the credit score is and even fewer have obtained their credit reports. Some findings of the survey conducted by Credit Sudhaar across eight major cities.

Survey Results:

Are You aware of credit scores and credit bureaus?

53% No Least aware 79% No Hyderabad
47% Yes Most aware 75 % Yes Chennai
*Though awareness remains low, it has improved since 2013 when only 14% were aware


Do You Know Your Own Credit Score?

85% No Least aware 99% No Pune
15% Yes Most aware 40% Yes Chennai
*It is essential & defines the interest rate you pay. Still a large majority of consumers are unaware of their scores


Have You Ever Obtained Your Credit Report?

89% No Least Involved 99% No Pune
11% Yes Most Involved 31% Yes Bengaluru
*This apathy could change as RBI has asked credit bureaus to provide one free report in a year.


Can A good credit report score help you get a loan?

70% Yes Least Aware 80% No Hyderabad
30% No Most Aware 91% Yes Delhi
*A large majority is unaware that good credit score allows them access to easy loans


Will a good credit score lower the cost of the loan?

59% No Least involved 90%No Hyderabad
41% Yes Most Involved 72% Delhi
*Many people don’t realise that a good credit score can get them loans at lower rates


Will you check your credit score before applying for a loan?

56% No Least Concerned 91% No Pune
44% Yes Most Concerned 67% Yes Delhi, Ahmedabad & Bengaluru
*If the borrowers know that the score is a key parameter and ways to improve it, they will be more keen to know.

Source:ET Wealth